Somewhere deep in the furthest outreaches of east London is a council estate on the edge of an industrial wasteland, surrounded by fridge mountains, abandoned cars and semi-legal backstreet garages. The Carpenters estate in Newham is the unlikely setting for a government scheme designed to promote interactive communications.

The estate has few of the basic facilities available in other London boroughs, but inhabitants in the 400 flats are hooked up to the latest in optical-fibre network technology enabling them to use their TV sets to pay council tax, make appointments with GPs, book plumbers and report abandoned cars among many other activities. And it's getting surprisingly high usage - up to 35% of the estate's occupants.

This is just one of many interactive trials that is informing the government's £6bn investment in getting Britain online in a bid to reduce the cost of running public sector services and, as the prime minister said in his e-Summit speech last November, to foster "a new relationship between citizen and state". New media, it seems, is hot news in government circles, which is about the only good news for those left in a sector on which the financial markets have long since closed their doors.

YooPublica, a new unit set up by interactive games and chat developer, Yoomedia, and headed by former Telewest broadband chief, David Docherty, is one of the many companies lining up for a share of the funds allocated by the government to get every department and local government operation online by 2005.

At issue is the extent to which the government will "sex up" its largely web-based services with more compelling content that is available on multiple media platforms, like digital TV. This medium is proving crucial in bridging the digital divide between low-income groups and the higher income digerati in trials run by the Department of Health and local government.

The evidence is that where few use the government's web services, even when offered incentives, digital TV is proving capable of bridging the digital divide between low-income groups and the higher income digerati. Digital TV penetration has also now overtaken that of PCs in Britain and is growing fast.

"So many public sector websites seem so daunting and formal because a lot of them are being led by technology experts rather than media experts who know how to get and keep an audience," says David Docherty, chief executive of YouPublica. "Being a technology solution provider is not the way to resolve your relationship with the public."

This goes to the heart of the challenge facing the new media industry. Companies like US giant Electronic Data Systems made rich pickings in the last two decades from computerising the back-office operations of the British government, but the new media players now face the potentially more challenging problem of getting the British public to use interactive services.

This will require more than technology know-how from the range of companies hoping for a piece of the action. YouPublic will push the combination of its experience in TV entertainment and digital technology hard. Of the other new media start-ups that still exist, TwoWay TV and Living Health - the company behind the government's trial on Telewest's cable network in Birmingham, which gave people 24-hour health advice, are also expected to bid for some of the funds. And at the other end of the scale, the ubiquitous Microsoft is also circling around the spoils.

Already under way at the Department of Health is a contract tender to create an electronic patient care records service at a cost of £10bn over 10 years. It will also shortly tender for contracts to create Encyclopaedia Health Online, an interactive reference service, and it is going out to tender now on a contract to expand its NHS Direct service to all digital TV platforms across the UK. At the moment, people can access it on the web, over the phone and from public kiosks.

The Department of Education wants to develop "Teachers' TV", an interactive TV service at a cost of £60m. And the office of the deputy PM is about to see if people can be shaken out of their voter apathy in an upcoming local election if they are given the option of doing so through their TV sets, PCs and mobile phones. "We're right at the beginning of this route," said Bill Edwards, director of e-communications in the Office of the e-Envoy, and a member of its strategy board, speaking at a recent conference on the issue. "We want to deliver services across multiple channels."

Mobile strategies are as yet thin on the ground across government departments, but digital interactive TV is rising up the agenda. Four interactive TV trials set up and run by the DoH in the last two years, including the Carpenters estate, throw up interesting results: a surprising number - up to 39% in some cases - used digital TV services; older men and younger women are more inclined to interact through TVs than a PC; and digital TV appears to attract more people on low incomes.

Digital TV has a number of advantages: people trust it; it is regulated and rooted in entertainment; and 95% of the population have a TV and know how to use it. Low-income groups have proved more willing to subscribe to digital TV than to internet service providers.

"We see digital TV as another channel for accessing the health service for potentially fast and convenient access for a particular group of the population, which are not likely to use the internet or other routes," says Peter Dick, operational research programme manager at the DoH. In experiments, 49% of participants said they would pay their TV licence through their TV set, 67% said they would apply for a passport and 48% would book a driving test. And 91% said they would probably use the service again.

Beyond the advantages digital TV has over PCs, Patricia Hewitt, trade and industry minister, outlined another reason why the government is so interested in these other media platforms in a speech in Tokyo in 2001: "The first generation gave us the internet through PCs. Internet for the few - with devices that are still expensive and often unfriendly," she said. "Here the US led the world. But the second generation of the internet is for the many. Internet through mobile devices, through digital TV, and through a host of internet appliances. Cheaper, easy to use. Here it is Japan and Europe and particularly the UK that have the edge."

Digital interactive TV and, later, mobile phones are to play an increasingly important role in getting Britain online, along with the internet. But as Stephen Timms, minister for energy, e-commerce and postal services says, the challenge now, one that falls to the new media industry, is "to get these services taken up by people."